Mortgage Blog

Finding the right real estate agent is critical to selling your house or landing that dream home you have always wanted. Many people choose to work with a realtor because they are a family member or were recommended by a friend. This is not always wise. Instead look for someone who is both experienced and successful. I recommend working with a full time realtor as they will be able to devote more time to your case.

Talk to several realtors. Treat it as a job interview which is exactly what it is. Don’t forget that if you are selling your home – the commission rate is negotiable. However, you also get what you pay for – so if you expect a high level of service, also expect to pay for it.

Don’t sign a contract for more that 3 months. Hopefully you will be successful within that time frame but if not you do not want to be bound to a Realtor you may not be satisfied with.

Check your gut instincts. Do you feel comfortable with this person? Are they responsive to phone calls and email – ask for references. You can also check with your state's real estate licensing board to make sure the agent is licensed and in good standing in your state. Finally, you may want to contact the local Better Business Bureau to see if there are any complaints against the agent or the agency.

1. Not shopping enough. Hard as it is to believe many people only obtain one quote when looking for a mortgage. Sometimes they go to their Bank or Credit Union and sometimes they use the lender recommended by the realtor or builder. This is a big mistake. I recommend you look for 3-4 quotes. Be fair and let everyone know you are shopping. Don’t necessarily go for the lowest bid. Be sure to take reputation into account. Otherwise it could come back to bite you later.
2. Shopping too much. If you shop around too much you greatly increase your likelihood of coming across the bad actors in our industry. Look too hard for the “lowest” rate and you are sure to find someone willing to say anything to get your business. They know you are unlikely to walk away at closing – so it works for them – at least in the short run.
3. Choosing the wrong loan. If you are on a fixed income don’t pick a high risk loan such as the “Option ARM”. This type loan gives you a low teaser rate – often around 1% - but can pile “negative equity” on your mortgage balance. Know your risk level and stick with it. A reputable mortgage professional won’t steer you in the wrong direction - which brings up number four.
4. Not doing your homework. This goes hand in hand with the first two. Research the companies you are considering doing business with. The Better Business Bureau and your States financial regulatory body are good places to start. If you are dealing with a Mortgage Broker – make sure they are a member of the NAMB (National Association of Mortgage Brokers). Ask for references. Look for someone who returns your calls, is pleasant, informative and knowledgeable.
5. Not telling the whole story. Don’t hold relevant information back from your loan officer. For example, if you are self-employed and have difficulty proving your income – tell him/her in advance. It will ensure you get an accurate quote and make the loan process run smoothly.
6. You like to look them in the eye! Don’t select a Lender just because they have an office near you or because you have your checking account there. That local office may add to overhead and mean a higher rate. Once again get 3-4 quotes and check reputations.
7. Not Reading the paperwork. Read the paperwork! Your Lender will send you loan disclosures within 3 days of your application. Pay special attention to the “Good Faith Estimate” (GFE) which will show your closing costs and the “Truth in Lending” (TIL) Form which shows your APR. At closing pay attention to the “HUD1” form which will show your final closing costs. Also important the “Note” (which shows your interest rate) and look for any mention of a “prepayment penalty”. This could cost you thousands if you plan on moving or refinancing in the near future. If you have any questions ask your loan officer right away.

One final note: I have been in the mortgage industry for 8 years. I have a financial industry background going back over 20 years. In my experience most mortgage people are honest and want to help you. Avoiding these seven mistakes should make your next mortgage experience an enjoyable one.

Peter we covered this on March 13th, you can review that posting at when to buy. I would like to add some free advice to the earlier posting. Since its free its worth exactly that so don't call me complaining if my advice was off the mark.

If you are selling in order to buy - go ahead. What you lose on the one transaction you should be able to gain on the other. So if you have to drop your price you should expect the seller of your prospective home to do the same. If you only need to buy - go for it! There are some amazing deals out there but plan on holding for a while if you want to make money.

If you are thinking of selling - expect to lose your shirt. If you can afford to hold on to the property until the market stabilizes do so. Consider renting it out to defray the cost. Once again folks - since this advice is free I provide no warranty or guarantee.

Thank you David Miller for our first question.

Whether you are a first-time homebuyer, or refinancing an existing mortgage, you should expect to pay certain costs upon closing a home loan. Mortgage transactions are covered by the Real Estate Settlement Procedures Act (RESPA). All consumers are entitled to an estimate of all closing costs. The costs are itemized on a Federal form called a Good Faith Estimate (GFE) of Costs. We will furnish you with a GFE at the time you make a loan application with our Company.

The actual closing costs will be itemized on the closing statement known as the HUD 1 sometimes called the "settlement statement. The Real Estate Settlement Procedures Act allows you to inspect the closing statement one day prior to the date your loan is scheduled to close.

Some closing costs that consumers should expect to pay include the cost of appraisal, title search and endorsements, an escrow deposit for taxes and insurance, application fee, credit report, survey, pest inspection, document preparation, administrative, processing and underwriting fees. You may also expect to pay the cost of recording the mortgage, which includes stamps and tax on the mortgage deed. These recording costs are governed by state law.

Our Mortgage Broker fee (if any) will appear on the Good Faith Estimate and HUD-1. Loan Discount also called points is a one-time fee paid to the lender or broker to lower your interest rate. Lenders sometimes pay the broker for brokerage services. These costs will be shown as “Paid Outside of Closing” POC on the Good Faith Estimate and HUD-1. These costs are not added to the costs paid at closing, but state and federal law requires that you know the amount lenders pay for brokerage services. If you have questions about the costs, you should ask your mortgage broker or originator for an explanation.

Other fees that consumers might pay that are separate from normal loan costs include attorney fees, Realtor® commissions and home inspection fees. We will provide a list of service companies we have used in the past and you may choose whomever you wish to provide closing services.

If you would like further information on closing costs, please read the HUD Guide on Settlement Costs, which you are to receive at application. We are not required to provide it if you are refinancing a currently-owned property, but we will be happy to do so upon request.

(Some information provided in this posting was taken from the Florida Association of Mortgage Brokers consumer guide to closing costs)

It has become almost standard operating procedure for Builders to insist that consumers buying a new home use the builders own lender. Very often a mixture of incentives and threats are applied to force the buyer to accept loan terms worse than those available from Independent lenders and brokers.

We recently experienced this first hand when a repeat client attempted to buy a home from one of the Nations top builders using us for the financing. The builder embarked on what can only be termed a campaign of intimidation ultimately ending only on the day of closing.

I had intended to write in much more detail about this issue but then I came across an excellent article by Mr. Ken Harney of the Washington Posts Writers Group. He offers a lot of good advice to consumers who find themselves in this position. You can read the article for free at The Nations Housing.

If you wish to file a complaint relating to unfair tactics used by a builder you can do so by calling the relevant Federal authorities at 202-708-0502 or you can email hsg-respa@hud.gov.